New Greenland government vows changes for raw materials industry

The mining industry in Greenland can expect major changes, after general elections last month (12 March) brought a new government reluctant to hand out new oil drilling licenses.

Only a few weeks after becoming Greenland's first female prime minister, Aleqa Hammond from the Siumut party, and her new government have already changed the political landscape on raw materials, the hottest issue in the Arctic nation.

In its new official work programme, Greenland's new government vows to halt all new oil exploitation licences in the country, while existing licences will be subject to more scrutiny. It also wants to make it harder in the future to hire foreign workers in the mines.

Hammond's government wants more focus on environmental protection, as well as an increase in the royalties that Greenland receives from the biggest mining projects.

With the new work programme, Hammond has shown that she does not believe the analysts who predict that the Greenlandic minerals rush could end before it has even started if Greenland tightens industry regulations.

China has been eyeing major investments in Greenland, whose increasingly autonomous national government has been looking further afield for investors.

The UK-based London Mining, a firm backed by Chinese steelmakers, is planning a $2.3 billion (€1.7 billion) iron ore mine near the capital of Nuuk. About 2,300 Chinese workers are expected to work at the mine which would supply China with iron.

Greenland has awarded some 150 licences in all for mineral exploration compared with less than ten a decade ago. Companies spent about $100 million (€74.8 million) last year alone on exploration on land, and oil companies spent more than $1 billion (€0.75 billion) exploring offshore.

License to drill

During the election campaign Hammond promised that foreign companies wanting to drill in Greenland would have to pay a lot more for access, a policy she is now pursuing in a government coalition with the liberal party Atassut and the left-wing Partii Inuit.

The temporary halt to new licenses for oil drills follows predictions from analysts that offshore oil to the east and west of Greenland could have greater financial potential than deposits of iron, rare earth mineral and gems on the mainland.

"Too many licenses have been given. The oil hunt should have a scale and level where the society can still follow," Hammond told the online newspaper Sermitsiaq.

A previous law which ensured that foreign workers could come to Greenland easily and work on bigger projects is also up for review. Previously, Chinese workers could work under a Chinese accord, but in the future the mining industry will have to negotiate with Greenlandic organisations.

Background

Greenland is a self-ruled territory of the Kingdom of Denmark. The world's second largest island after Australia, it is about half of the size of the EU.

Around 57,000 people live in Greenland, making it the least densely populated country in the world. Only 44 politicians are in charge of the country (including ministers, MPs and mayors).

Greenland was granted home rule in 1979, but the Danish government is still in charge of foreign affairs, financial policy and security - including defence, police and justice. Denmark provides a subsidy of 3.4 billion crowns (€457 million) per year.

Greenland joined the European Common Market along with Denmark in 1972, but left the European Economic Community (EEC) in 1985 over the bloc's commercial fishing regulations and ban on seal skin products.